BOSTON - Leaders of the state Legislature on Tuesday unveiled a plan to finance transportation improvements by increasing the state gas tax by 3 cents a gallon, hiking the cigarette tax by $1 a pack and increasing taxes on utilities and certain software services.

The plan would kill Gov. Deval L. Patrick's legislation to increase the income tax from 5.25 percent to 6.25 percent and lower the sales tax from 6.25 percent to 4.5 percent. The plan by legislative leaders would generate $500 million a year, or only about one quarter of the new revenues sought by the governor for education and transportation.

Speaker of the House Robert DeLeo, left, looks to Gov. Deval Patrick, as he spoke during the signing ceremony for a bill legalizing casino gambling in Massachusetts in 2011. The two might consider holding a similar event for a bill to increase the gas tax.Josh Reynolds / Associated Press file

The plan would eliminate an immediate need for further fare hikes or service cuts on the MBTA, but it does not earmark money for specific transportation projects such as the planned overhaul of the elevated section of Interstate 91 in Springfield.

Sen. Stephen M. Brewer, D-Barre, chairman of the Senate Ways and Means Committee, said the plan would help Western Massachusetts by boosting Chapter 90 aid for municipal roads by 50 percent a year from $200 million to $300 million statewide. Brewer added that the plan would also increase the budgets of 15 regional transit authorities, including enough to avoid a possible fare increase at the Pioneer Valley Transit Authority in Springfield and to possibly expand services in the future.

The plan, which would hike the state 23.5-cent-a-gallon gas tax for the first time in more than 20 years, was released at Statehouse press conference by Senate President Therese Murray, House Speaker Robert A. DeLeo and top legislators.

The plan also includes an annual increase for inflation on the gas tax, equaling about a half a penny a gallon, starting in January 2015.

The state House of Representatives next week is likely to vote on the transportation plan. Separately, the House is expected to unveil its budget for the fiscal year that begins July 1.

Stephen Brewer

Several legislators from Western Massachusetts said it could be difficult to raise the gas tax in the region because people depend more heavily on their cars and trucks.

Rep. Sean F. Curran, a Springfield Democrat, said the gas tax increase would be a "tremendous sacrifice" for people in Western Massachusetts, considering gasoline generally costs between $3.70 and $4 a gallon this week.

Curran said he didn't believe there would be too much support from his constituents.

"There probably is going to be a lot of opposition," Curran said. "Residents are extremely reliant and dependent on their automobiles."

Sen. Gale D. Candaras, D-Wilbraham, said the plan would be a difficult vote. Candaras said the plan raises a lot of questions, including whether a proposed increase in the excise tax on utilities, including electric companies, would be passed on to consumers.

Sean Curran

Candaras said Patrick's plan to increase the income tax was not marketable. She said she is concerned about the proposed gas tax increase, even though it would be modest, because of the effects in Western Massachusetts.

"That would be a bitter pill for folks to swallow," she said.

Candaras called the plan "a very interesting trial balloon," with input from the Senate president, the speaker and possibly the governor.

Candaras said a good chunk of the $500 million would go to the MBTA, but she would want to know whether it would provide for the 50 percent increase in state funds for municipal road repair. "I want to see how the money is going to be spent," she said.

Rep. Joseph F. Wagner, a Chicopee Democrat, said the increase in the tobacco tax would be disproportionately borne by people in the eastern part of the state because more people live there.

Wagner said people understand the need for good roads and bridges. "Nobody ever wants to pay more, but I think people recognize that roads and bridges don't fix themselves," he said.

Brewer, whose district includes Palmer, said the plan promotes "regional equity" by increasing Chapter 90 local road funds and increasing the budgets of 15 regional transit authorities. Brewer said it would "untenable" to require taxpayers to fund "a perfect road system" in one fell swoop.

"You can't have a spending plan without a revenue plan," Brewer added. "We wanted this sooner rather than later."

As previously promised by DeLeo, the plan dramatically reduces Patrick's goal to raise $1.9 billion a year, including $1 billion for transportation and other capital improvements. When he testified for his bill on March 8, Patrick said he was open to compromise on the ways to raise the money, but he said he would be wary of a plan with narrower impact and smaller growth.

The plan also includes no money for education. Patrick sought to raise $900 million a year for education, including money to eliminate a wait list for state subsidized early childhood education, increase college scholarships and possibly prevent further fee increases at the University of Massachusetts, community colleges and other campuses.

Patrick was unavailable to comment on the plan, but released a statement, saying: “I thank the House and Senate leadership for considering my plan and look forward to thoroughly reviewing theirs. My principles continue to be whether the financing is enough, dedicated and fair, and I will review the Legislature's proposal in that light.”

The plan would raise the state's 23.5-cent-a-gallon gas tax by 3 cents a gallon, Brewer said. The increase would add $30 a year to a motorist who drives 20,000 miles and gets 20 miles per gallon, according to Brewer.

Rep. Todd M. Smola, a Warren Republican, said the plan by legislative leadership is certainly more palatable than the governor's bill to increase the income tax. Smola said the plan is a more reasonable compromise, but regional equity will be critical.

"We have to make sure that Western Massachusetts is not ignored," Smola said. "We want to make sure we are not forgotten."

Sen. James T. Welch, D-West Springfield, said he understands the need for increased revenues and the plan is certainly much more modest than the governor's bill. Welch said he is open to the plan, but he needs to look at details.

Welch noted that the gas tax last increased in 1991. In 2009, Patrick sought to increase it by 19 cents a gallon.

"It's much easier to consider a 3-cent increase than the 19-cent increase of three years ago," Welch said.

The plan also calls for the state to finance the regional transit authorities in advance. Transit authorities now have to borrow for their budgets and then get reimbursed by the state.

The Pioneer Valley Transit Authority receives about $17 million from the state for its $38.3 million annual budget.

Mary L .MacInnes , administrator for the transit authority, said the plan calls for an increase in the authority's state funding of $1.5 million for the fiscal year starting July 1 and another $3.8 million for the fiscal year starting July 1, 2015. That would bring the state subsidy to about $22.3 million.

MacInnes said that without the extra $1.5 million for the next fiscal year, the authority would have been left with a gap in its budget and the 24-member advisory board possibly might have voted to increase fares. With the additional $3.8 million for fiscal 2015, the authority may be able to add new services, she said.

MacInnes said a new funding formula, developed by the Massachusetts Department of Transportation, distributes new funds to the 15 regional transit authorities based on the number of riders. The Pioneer authority could soon reach 12 million trips for people each year, by far the greatest number of any authority, she said.

Forward funding from the state would currently save the authority about $300,000 in borrowing costs.

Subsidized by state and federal money and local assessments, the authority offers service to the elderly, the disabled, students and others who may not have automobiles.

The authority provides fixed-route bus service and paratransit service to 24 communities, including Amherst, Chicopee, Holyoke, Northampton, Palmer, Springfield and Westfield.

Here are key details of a plan by leaders of the state Legislature to raise $500 million a year for transportation improvements:

Raise the state's 23.5-cent-a-gallon gas tax by 3 cents a gallon, starting July 1. At the gas tank, people currently pay 21.5 cents a gallon for gas and 2.5 cents a gallon to pay for removal of contaminated underground fuel storage tanks, according to the Senate Ways and Means Committee.

Establish an annual increase for inflation on the gas tax, equaling about a half a penny a gallon, starting in January 2015.

Increase the state's cigarette tax by $1 a pack to $3.51 a pack. Tax hike would take effect on July 1.

Apply the 6.25 percent sales tax to certain software services to ensure that both the purchase of software and modifications to software are both subject to the sales tax. This makes Massachusetts one of 35 states that now charge some form of sales tax to computer services.

A phased end to the practice of paying 1,900 department of transportation employees from bond bills for capital projects, freeing up more money for roads and bridges.

Source: Office of Senate Ways and Means Committee and Overview of the Legislative Transportation Finance Framework.